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Confidence among small firms worsened in the July-September quarter, and they expect the dismal situation to continue through the next three months, according to results from a survey released Oct. 13 by the National Association of Shinkin (credit association) Banks. The results reaffirmed the gloomy business climate reflected by the Bank of Japan’s “tankan” survey of last month.The diffusion index for business confidence in the July-September quarter fell 4.3 points from the previous quarter to minus-25.4. The index is calculated by subtracting the percentage of firms that believe business conditions are unfavorable from that of firms with a positive outlook. The sales index, calculated in a similar way, was minus-14.2 from the previous quarter.Manufacturers, which had led the small businesses, began to lose confidence, especially among industries closely related to private consumption and raw materials. But machinery-related manufacturers maintained a positive business sentiment, the survey showed.Confidence among construction firms deteriorated because of the reduction in public investment, and so did that among real estate firms, which suffered falling land prices.About 15,000 small firms across the nation answered the survey administered by local “shinkin” banks in early September.

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